NetLessor - Mass Close Out Leases

Use Case: At the end of a lease term, for sales and direct financing leases, you have account balances remaining in the Net Investment in Lease (NIL) Lease Receivables and Unguaranteed Residual accounts that need to be cleared. 

Prerequisite: In order to automatically be set to "Pending Close Out" status, the last month's amortization for a Sales Type or Direct Financing Lease must be complete. 

STEP BY STEP PROCESS

  • The lease you want to close out will have a remaining balance in the NIL Lease Receivable and the Unguaranteed Residual accounts, and the status is set to Pending Close Out

  • Navigate to NetLessor > Mass Update Leases > Mass Close Out Leases       

  • Enter any desired filters and click Filter Results if you would only like a subset of leases to close out. Once you’re happy with the leases displaying in the sublist, click the Mark All button then click the Close Out button.
  • Click Refresh until the process status shows Complete


  • Once the close out process is complete, you will see a NetLessor Close Out Entry on the last line of the amortization schedule in the lease you closed out. 

  • The close out entry balances in the NIL Lease Receivable and the Unguaranteed Residual Value are now zero
  • Select the hyperlink for the close out journal entry to see the recorded journal entry
    • Credit “Net Investment in Lease - Receivable” 
    • Credit "Net Investment in Lease - Unguar. Residual"
    • Debit "Inventory Clearing Account"
2 or 3 Line Journal Entries?
Note that if you have elected to segregate NIL into both Lease Receivable and Unguaranteed Residual Value, you will have a 3-line entry as noted in this example. Otherwise, expect a simple 2-line adjustment

  • In this entry the NIL Receivable and NIL Unguar. Residual amounts were individually credited to net the account balances to zero. The Inventory Clearing Account now shows a debit for the amount we cleared out of the two NIL accounts.
Clearing Balances from Inventory/Fixed Asset Clearing
Any amounts that remain in the Inventory clearing account will need to be manually cleared depending on the disposition the lease resulted in. Common occurrences result in moving the asset back into inventory or selling the asset to the customer or another 3rd party. If the latter occurs, be sure to manually post the associated gain or loss with the sale of the asset with a journal entry.
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